Lucy Harley-McKeown
European, FTSE 100 and US stocks drop as market selloff deepens
How major markets are performing on Monday
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The FTSE 100, European and US stocks followed the market mood music on Monday, dipping following a selloff in global stocks last week. Moves lower, including a 12.4% dip for the Nikkei, have been partially triggered by lacklustre employment numbers published in the US on Friday and falling confidence in how the Federal Reserve has managed interest rates.
The FTSE 100 (^FTSE) fell 2.4% by the closing bell. Germany's DAX (^GDAXI) was down 2.4% and the CAC (^FCHI) dropped 2% in Paris.
The pan-European STOXX 600 (^STOXX) was 2.6% in the red.
Over in the US, the S&P 500 (^GSPC) fell 2.5%, the DOW (^DJI) dipped 2.4% and the tech-heavy Nasdaq (^IXIC) declined 2.7%. Indexes recovered somewhat having lost as much as 5% of their value earlier in the session.
Wall Street's "fear gauge" — the CBOE Volatility Index (^VIX) — soared, reaching its highest level since the early days of the COVID-19 pandemic. US treasury yields plummeted, with the benchmark 10-year treasury yield (^TNX) sinking below 1.1%.
Two companies that were especially feeling the heat on Monday were Nvidia (NVDA) and Apple (AAPL). The Nasdaq's chip darling dropped 11% at the opening bell — later trading around 5.5% lower, while the iPhone maker was 3.4% lower after Berkshire Hathaway nearly halved its stake.
Employment figures published on Friday spooked US investors, pushing the three major indexes lower as market watchers speculated that the Federal Reserve has left it too late to cut its key interest rate. The Nasdaq is now in correction territory, more than 10% below its recent high in early July.
The data showed the US economy added 114,000 jobs in July, when economists had expected 175,000. The unemployment rate stands at 4.1%.
The Nikkei's dip was partly sparked by the Japanese central bank raising its key interest rate on Wednesday.
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Market selloff crashes brokerage websites
Interest in markets today is so much that even brokerage websites are buckling under the pressure of activity.
According to Down Detector, reports of outages or problems at Charles Schwab, Fidelity, Vanguard, Ameritrade and E-Trade rocketed in the hour after US markets opened. Retail trading platform Robinhood was also among casualties.
Credit: Down Detector Next Bank of England cut in November?
Enrique Diaz-Alvarez, chief financial risk officer at global Ebury looks at the BoE's next moves and the pound:
"The Bank of England cut rates by 25 basis points last week, as we and most strategists expected, although the vote was a very balanced 5-4 in favour of an immediate cut.
"The move was seen as ‘hawkish cut’, however, as the MPC refused to commit further or provide any forward guidance, although it did warn that it would not cut rates too fast or too deep.
"We think that this is consistent with cuts at every other meeting, with the next one likely to follow in November.
“Sterling held up quite well amid market volatility and a generalised flight to safety, ending the week within 0.5% of where it began it against the dollar and down a bit more against the euro.
“No news of note will be released in the UK this week, but we continue to think that resilient demand, relatively high rates and the prospects for closer UK-EU relations bodes well for the pound.”
What to watch when markets open later: Disney
Walt Disney stock was down almost 3% in premarket trade on Monday. (Getty) (Gary Hershorn via Getty Images) Walt Disney stock was down almost 3% in premarket trade on Monday ahead of its earnings report. Wall Street analysts expect the entertainment behemoth will report quarterly earnings of $1.20 per share, pointing to a year-over-year increase of 16.5%.
Forecasts also say revenues will hit $22.86bn, an increase of 2.4% compared to the same quarter a year ago. The consensus earnings-per-share estimate has actually been revised up for the quarter over the last 30 days by 0.3%.
Earlier this month workers in the US came to a pay deal with the conglomerate, as union action averted its first strike in around 40 years.
Meanwhile, the Mickey Mouse creator said it would lay off about 2% of its workforce in its Disney Entertainment Television devision ahead of its Q3 earnings, Adweek reported.